The Adjusting Entry to Record Estimated Losses from Uncollectible Accounts

question 14

Multiple Choice

The adjusting entry to record estimated losses from uncollectible accounts consists of a

• A)debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
• B)debit to Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.
• C)debit to Uncollectible Accounts Expense and a credit to Accounts Receivable.
• D)debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.

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Definitions:

Diversified Risk

Diversified risk refers to the reduction of risk in an investment portfolio by allocating investments among various financial instruments, industries, or other categories.

Systematic Risk

This is the exposure to uncertainty faced by all investments in a market or a sector, and is also recognized as market risk or non-diversifiable risk.

Unsystematic Risk

The risk of price change due to the unique circumstances of a specific security, as opposed to the market as a whole.

Market Risk Premium

The extra return expected by investors for taking on the risk of investing in the stock market over a risk-free rate.